Can a bull market in stocks exist in an atmosphere of rising interest rates? The answer is yes, for awhile. But eventually, rising rates will slow and then halt a bull market, and we've seen this many times before. I might also mention that trying to make money in an atmosphere of rising interest rates tends to be difficult. By the same token, I should say that when bonds are in a bear market, the risk of owning stocks increases exponentially.
I've said before that matters can be fun and speculative -- until the bond market says, "fun's over."
The stock market's first reaction to rising rates is usually, "Great, the economy's improving, let's buy stocks." But as rates continue to rise and bonds decline, the later reaction is that the rising interest rates are competing with stock yields, and the reaction is "Let's move out of stocks and into T-bills or ... Log in or subscribe to continue reading.
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